2006-07-12 08:21:51 · 2 answers · asked by fildebomb 1 in Business & Finance ➔ Investing
The only real difference that comes to mind is taxes. No taxes are due on ETFs until they are redeemed. I believe that capital gains taxes are due at that time.
Many mutual funds, on the other hand, have complicated tax structures that may involve paying a combination of ordinary taxes and capital gains taxes on the fund every year.
The point becomes moot if it is part of an IRA.
2006-07-12 08:39:01 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
For a young, long term investor, I think I'd recommend a broad based index fund instead. Not that I have a problem with ETFs-quite the contrary, in fact. The only reason I'd recommend the index funds is that they are a great tool for depositing systematic deposits (like a monthly automatic withdrawal from a checking account). The ETFs have some higher expenses to buy, so that wouldn't be a great vehicle for someone who may want to dollar cost average on a monthly basis.
Nice to hear that there are young long term investors out there!
2006-07-12 09:57:31 · answer #2 · answered by SuzeY 5 · 0⤊ 0⤋